FTB-C000637 / Formula component

Median Residual BPS

Median Residual BPS is the median absolute trendline residual reported in basis points on the ratio scale.

Advanced Formula defined 1 linked topicEvidence-reviewed

Definitions

In plain terms

It summarizes how tightly the selected inliers hug the line.

Technical

residual_bps_i = 10000×expm1(|log(p_i)-z_hat_i|); report the median over locked inliers.

Scope

Residual fit quality is not a probability of future price behavior.

Formula

residual_bps = 10000 * expm1(abs(log price residual))
LaTeX: r_i^{bps}=10000\,\operatorname{expm1}(|e_i|)
SymbolMeaningUnit
e_iabsolute log residuallog-price

Output unit: basis points

Examples

  • A reviewer computes Median Residual BPS on a small deterministic fixture and checks timing, units, and boundary behavior before publication.

Common misconceptions

  • Residual fit quality is not a probability of future price behavior.

Concept relationships

Prerequisites

Related

Required by

Where this concept is used

Tutorials planned

These catalogued topics use this concept, but their complete build has not shipped yet.

  • D08-F01-A04 Important

Evidence and governance

  1. Linear Least Squares Regression NIST/SEMATECH · official standard

    Supports: preferred label, short definition, technical definition, formula

    Limits: A fitted line remains descriptive and is not evidence of a future price path.

  2. sklearn.linear_model.RANSACRegressor scikit-learn · first party technical publication

    Supports: preferred label, short definition, technical definition, formula

    Limits: This package enumerates every two-point hypothesis for small pivot sets instead of using random sampling.

  3. numpy.log NumPy · first party technical publication

    Supports: preferred label, short definition, technical definition, formula

    Limits: A log transform requires positive finite prices and does not by itself define a financial level.

  4. numpy.polyfit NumPy · first party technical publication

    Supports: preferred label, short definition, technical definition, formula

    Limits: The glossary freezes its own log-space OLS contract, diagnostics, and tie rules.

Reviewed by
fintech-builder-batch-011
Last reviewed
2026-08-09
Next review
2027-08-09
Record status
evidence reviewed

This record is evidence-reviewed and readable, but not yet promoted to published — it is served noindex,follow and excluded from the sitemap.

Written by

Fintech engineer building market-data and financial systems, and the author of every article, glossary record, and reference implementation on The Fintech Builder.